Plastic cards carrying magnetic stripes are widely used as credit cards, debit cards, automatic teller machine (ATM) cards, telephone payment cards, etc. It is believed that billions of these cards are used throughout the world.
Typically, these cards hold approximately 200 alphanumeric characters, which is the same as 200 bytes of data in computer language. The magnetic stripe is erasable and is read and written by a wide variety of commercial devices.
A variety of methods are used to enhance the security of such cards and to discourage fraudulent use. Holograms are affixed to the cards to make card counterfeiting more difficult. Color face photographs of the registered card owner are affixed to the card for confirmation that the possessor of the card is the rightful owner. Personal identification numbers (PIN) are memorized by the card owner and entered into terminals such as bank ATM terminals to prove card ownership prior to cash payments to the card possessor.
In U.S. Pat. No. 4,683,371, Drexler teaches a dual strip card having both prerecorded data on a non-erasable strip and temporary data on a spaced apart, erasable strip.
In U.S. Pat. Nos. 4,879,747 and 4,995,081, Leighton et al. teach a method and system of encoding a password into a digital signature. The password may include a digitized photograph of the authorized cardholder which may be displayed at the transaction terminal.
U.S. Pat. No. 4,961,229 to Takahashi teaches a speech recognition system utilizing an IC card, and IC card reader, a microphone, and analyzer and a collating circuit, which are used together for identification of a person.
U.S. Pat. No. 4,993,068 to Piosenka et al. discloses a system for identifying users at remote access sites that encrypts physical characteristics of a user and stores the encrypted information in a computer, and then compares information received from a person requesting access at a remote site with that of the user to determine whether to allow access.
In U.S. Pat. No. 5,053,608, Senanayake discloses a personal identification system in which a user's fingerprint is recorded in encoded form permanently on an identification card and also temporarily in one of the secretly designated areas known only to the card holder and reader. This permanently encoded fingerprint is then compared with that of a fingerprint temporarily recorded at the time of use in one of the designated areas.
Finally, in U.S. Pat. No. 5,259,025, Monroe et al. teach a method of verifying the personal identity of an individual at a remote location by comparing video information received at the remote location with that previously recorded and stored at a central location.
In spite of all the anti-fraud methods currently used for obtaining credit, receiving cash, receiving miscellaneous benefits, etc., fraudulent use of magnetic stripe cards results in losses estimated at from many hundreds of millions of dollars to billions of dollars annually. The fraudulent methods involve a variety of techniques. Magnetic stripe cards are stolen. Lost cards are found and used. Cards are counterfeited. A person may apply for and have cards issued in the names of unsuspecting credit-worthy individuals. PIN numbers may be obtained by observing an ATM user entering his number or finding a PIN number noted in a lost or stolen wallet.
It is a current trend for welfare benefits to be paid out by electronic means. A number of states, including New Jersey and Maryland, have adopted Electronic Benefit Transfer (EBT) programs and many other states are considering EBT systems. The Health Security Act being proposed by the President and by some in Congress advocates the use of a plastic identification card which could evolve as a magnetic stripe card for health care providers to obtain payment from the health insurance alliances.
A recent analysis of the British total welfare program indicates that of $120 billion dispensed annually, $7 billion is obtained fraudulently. In Australia, an extensive study of welfare fraud indicates at least 5% to 15% of the welfare benefits are obtained fraudulently.
An objective of the present invention is to devise an anti-fraud verification, reverification, validation or authorization terminal for magnetic stripe cards to deter fraudulent use of such cards in Electronic Benefit Transfer systems for welfare programs, state entitlement programs, government-mandated healthcare programs, and the like.